The global securities trading industry had a noticeably weak run in the seasonally slow third quarter – something that stood out in particular given unusually elevated activity levels over the first half of the year. The primary reason for this was that equity and debt market volatility was higher in the first two quarters of the year, when securities trading activity is already seasonally higher. That said, market conditions for Q3 2018 were overall slightly better than what was seen a year ago in Q3 2017. This would explain why the combined securities trading revenues for the five largest U.S. investment banks nudged higher from $17.6 billion in Q3 2017 to $17.8 billion in Q3 2018.

Although industry leader JPMorgan reported a small reduction in total trading revenues year-on-year, the exceptionally high figure for the first half of the year boosted these revenues for the first nine months from under $15.2 billion in 2017 to over $16.4 billion in 2018 – an increase of 8%. Taken together with the expected positive impact of higher equity market volatility over October and November on Q4 trading revenues, this makes it likely that JPMorgan will report total trading revenues in excess of $20 billion for full-year 2018.

The table below details the trend in total securities trading revenues (equity as well as fixed income) for each of these banks in the last five quarters. The green-to-yellow shading along a column highlights the relative performance of each bank in any given quarter. JPMorgan’s dominance in the securities trading industry is evident here. Notably, the diversified banking giant’s average trading revenues over the last fifteen quarters was nearly $5 billion – a figure that is almost 30% more than that of its closest rival Citigroup ($3.9 billion). While the average revenue figure for Goldman Sachs over this period was $3.5 billion, Morgan Stanley and Bank of America reported near-identical average revenue figures just over $3.3 billion.

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JPMorgan has ranked #1 in nearly every quarter since Q4 2010 – with the exception of Q4 2012, when Goldman Sachs grabbed the top spot – primarily due to its strong presence in the global FICC (fixed-income, currencies and commodities) trading industry. Although Goldman Sachs reported more than $20 billion in annual securities trading revenues on several occasions before the downturn, it has been quite rare post-2010 because of stricter regulatory requirements and the restrictions imposed on proprietary trading by investment banks.

Since 2011, there have been only two instances when a bank made more than $20 billion from trading securities in a year – with JPMorgan achieving this distinction in 2013 and 2016. The diversified banking giant has already made $16.4 billion in trading revenues over the first nine months of the year, and will breach the $20-billion mark again this year if it ropes in more than $3.6 billion in Q4 2018. This is looking fairly likely, despite the fact that the fourth quarter is seasonally the slowest period in a year, as the bank reported total trading revenues of $3.4 billion in Q4 2017. With debt and equity market conditions being better in Q4 2018 compared to the year-ago period, we expect year-on-year gains to be roughly 10% – indicating total trading revenues in excess of $3.7 billion for Q4 2017 for JPMorgan.

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